Winter Wheat

Agricultural commodities are in the news once again. While corn and soy prices have stabilized, wheat continues to rally.

Wheat futures (ZWN13; source: Barchart)

For those of us on the East coast of the US, the drought of 2012 seems like a distant memory, given the recent weather conditions (see post). So what's driving these prices higher? Sadly as the East Coast got hit by Hurricane Sandy and the nor'easter that followed, the Midwest has been in the middle of an ongoing drought. Here is the latest drought monitor map from the University of Nebraska.

Source: the National Drought Mitigation Center at the University of Nebraska-Lincoln, the United States Department of Agriculture, and the National Oceanic and Atmospheric Administration.

The focus now is on winter wheat. This is the wheat that is planted after the fall harvest. It sprouts before temperatures drop to freezing levels and stays dormant through the winter until the soil warms in early spring. Winter wheat is then ready to be harvested by early summer. The current drought is damaging wheat across Oklahoma and Kansas. Once again we look to the latest USDA report on crop conditions (see post), which shows the percentage of wheat in good/excellent conditions below 40%. . . .

US wheat crop rated good/excellent (%; source: DB)

http://soberlook.com/2012/11/midwest-drought-continues-winter-wheat.html